Santos narrows full-year loss to $US360m
Santos has again held back a dividend but raised the prospect of returning capital to shareholders if debt is reduced.
Santos has continued to hold off paying a dividend but raised the prospect of returning capital to shareholders if it can hit its debt-cutting target ahead of schedule.
The Australian energy company (STO) narrowed its loss over the past year and continued to eat away at its debt pile as cash flow rose following stronger sales volumes and improved prices.
Santos (STO) notched a net loss of $US360 million in 2017 against a year-earlier loss of $US1.05 billion, when it was held back by hefty impairment charge against the GLNG gas-export plant on the coast of Queensland state. The 2017 result included a further $US689 million in impairment charges, including against the GLNG project.
Stripping out impairments and other one-time items, earnings jumped for the year to $US336 million from $US63 million in 2016.
“Strong operating performance across the core assets resulted in sales volumes above the upper end of guidance and production toward the top end of guidance,” managing director and chief executive officer Kevin Gallagher said.
Net debt was slashed by another 22 per cent over the year to $US2.73 billion. That followed a 26 per cent cut to debt in 2016, as it targets $US2 billion in net debt by the end of 2019.
After riding the Australian boom in oil-and-gas investment, pouring billions of dollars into new projects from Australia’s east coast to new ventures in Papua New Guinea, Santos was forced to sell assets to shore up its balance sheet when it was hit by the slump in oil prices. Since taking the helm in early 2016, Mr Gallagher has focused Santos on the GLNG gas-export operation that counts Total SA among its partners, the Exxon Mobil Corp-led PNG LNG operation in Papua New Guinea, and projects in Northern Australia, Western Australia, and the Cooper Basin straddling South Australia and Queensland states.
The company said its board had determined again not to pay a dividend for the second half of the year, although with the turnaround in the underlying business directors would consider capital-management strategies if market conditions remained supportive.
Santos is targeting production in 2018 of between 55 million to 60 million barrels of oil equivalent after output slipped 3.4 per cent to 59.5 million last year. Stronger prices over the year helped lift sales revenue by 20 per cent for the year at $US3.11 billion, despite the dip in output.
In August, Santos rebuffed a takeover approach worth $9.48 billion from energy investment firm Harbour Energy, arguing the indicated price wasn’t enough and that the sources of funds behind the offer were uncertain.
In late 2015, it rejected as too low a $7.14 billion approach from Scepter Partners, a Bermuda-based private-equity firm backed by sovereign investors and wealthy members of Asian and Gulf-based ruling families.
Dow Jones Newswires
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout